Cementos Pacasmayo Q1 2026 Earnings Call - Holcim Takeover and Margin Expansion Drive Record Profits

Rafael, Conference Call Moderator, Cementos Pacasmayo: Good day, ladies and gentlemen. Welcome to Pacasmayo first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. Please note that this call is being recorded. At the conclusion of our prepared remarks, we will conduct a question and answer session. I would now like to introduce your host for today’s call, Mrs. Claudia Bustamante, Investor Relations Managing Director. Mrs. Bustamante, you may begin.

Claudia Bustamante, Investor Relations Managing Director, Cementos Pacasmayo: Thank you, Rafael. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer, and Miss Ely Hayashi, our Chief Financial Officer. Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook for the short and medium term. Miss Hayashi will then follow with additional commentary on our financial results. We’ll then turn the call over to your questions. Please note that this call will include certain forward-looking statements. These statements relate to expectations, beliefs, projections, trends, and other matters that are not historical facts and are therefore subject to risks and uncertainties that might affect future events or results. Descriptions of this risk are set forth in the company’s regulatory filings. With that, I’d now like to turn the call over to Mr. Humberto Nadal.

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: Thank you, Claudia. Welcome everyone to today’s conference call, and thank you for joining us today. As we discussed last quarter, our company has entered a transcendental new chapter in its almost 70-year history. On March 30, 2026, a significant milestone was finalized with the completion of the acquisition of Inversiones ASPI by Holcim Ltd, which now holds a 50.01% controlling interest in Cementos Pacasmayo. This change of control marks a powerful new stage in our evolution, opening global opportunities for our teams and promoting responsible, sustainable construction on a much wider scale. While we look forward to collaborating with a global leader like Holcim, I want to express my deepest and sincere gratitude to the Hochschild Group for the decades of vision and leadership that built the strong foundations upon which we stand today.

Our essence, values, and commitment to the development of Peru remain absolutely intact. I would like now to move on to an overview of our results for the first quarter of 2026. During this period, we achieved significant growth and demonstrated remarkable resilience. We saw strong momentum in sales volume with an 11.7% increase year-over-year, driven primarily by higher demand for cement and concrete. Our solid operational performance was further reflected in our profitability. Consolidated EBITDA reached PEN 177.9 million, an outstanding 32.1% increase compared to the first quarter of 2025. We achieved a significant expansion in our EBITDA margin, which reached 32%, up from 27% in first quarter of 2025. This was driven by disciplined cost control and gross margin expansion in our core businesses due to operational efficiencies.

Driven by our commitment to leading the industry responsibly, we reached historic achievements in sustainability this quarter. For the sixth consecutive year, we secured a position in the S&P Global Sustainability Yearbook 2026. Most notably, we have now entered the global top 10% of the construction materials industry, validating the continuous evolution of our ESG management. In terms of social impact, we recently formalized a strategic partnership with the Inter-American Cement Federation, FICEM, and Habitat for Humanity. This alliance integrates our local Sueños en Concreto program into the One Hundred Thousand Floors to Play On initiative, aiming to replace dirt floors with concrete to improve the health and quality of life for thousands of families in northern Peru. As we mentioned, we are very happy with the beginning of this year, and we hope this year will continue in a similar manner.

I will now turn the call over to Eli to go into a more detailed financial analysis.

Ely Hayashi, Chief Financial Officer, Cementos Pacasmayo: Thank you, Humberto. Good morning, everyone. For the first quarter of 2026, our revenue growth was very encouraging. Total revenues reached $555.7 million, representing an 11.3% increase compared to the first quarter of 2025. This growth was primarily driven by a robust 11.7% increase in total sales volumes across cement, concrete, and precast. Specifically, cement volumes show strong resilience, particularly in the bag cement segment, which continues to be our primary driver in the self-construction market in the north of Peru. Additionally, we saw a pickup in concrete sales as infrastructure projects in the region began to regain momentum. Gross profits for the quarter increased significantly, supported by higher volumes and improved operational efficiency. We are seeing the continued benefits of our optimized production at the Pacasmayo plant. Turning now to operating expenses.

Administrative expenses for the first quarter decreased slightly by 0.7% compared to the first quarter of 2025, mainly due to lower personal expenses, primarily reflecting a lower collective bargaining bonus than in the first quarter of 2025. Selling expenses increased 33.5% in the first quarter of 2026 compared to the first quarter of 2025, mainly due to higher advertising and promotion expenses related to marketing and loyalty programs from affiliated retailers, as well as an increase in provision for doubtful payments.

Moving to profitability, our consolidated EBITDA reached $179.9 million, a remarkable 32.1% increase compared to the first quarter of 2025. This was driven by the combination of higher revenues and moderate price adjustment in the cement segment, as well as a significant reduction in unit costs across our cement and concrete business lines. Along this same line, our EBITDA margin expanded to 32%, a 5 percentage point improvement over the first quarter of 2025. This level of profitability reflects our focus on operational excellence and disciplined expense management. Moving on to the different segments, cement revenues grew 16% to PEN 466.4 million, representing 86.5% of our total sales of the quarter. This performance was primarily driven by higher sales volumes of bag cement for the self-construction segment.

The gross margins on cement expanded to 48.2%, up 1.5 percentage points from first quarter 2025. This improvement was driven by higher volumes, a slight improvement in average prices, and lower unit cost resulting from reduced downtime of our kilns. For the concrete, pavement, and mortar segment, revenues decreased 15.2% to PEN 66 million. This decline was mainly due to a higher comparative base in the first quarter of 2025, which included significant volume from the Piura Airport project. Despite lower volumes, the gross margin saw a remarkable expansion of 18.3 percentage points, reaching 16.1%. This increase in profitability was mainly driven by sales to the Yanacocha project, which required more specialized higher-margin concrete solutions compared to a lower margin airport work.

Precast sales increased 4.8% to PEN 6.6 million this quarter when compared to the same period of last year. This growth was supported by increased demand from the public sector. Gross margins for precast reached 9.1%, a significant improvement of 7.5 percentage points over the previous year. This was primarily achieved through higher sales volumes, which allow for better dilution of fixed costs. Consolidated net income for the quarter was PEN 81.9 million, a remarkable 55.4% increase year-over-year. This growth is a direct result of higher operating profits and a decrease in financial expenses, and we continue to successfully reduce our leverage. Our net debt to EBITDA ratio stood at 2.6x.

To summarize, we continue to deliver solid financial results this quarter by capitalizing on favorable market conditions while diligently managing costs to achieve sustained profitability. Operator, can we now open the call for questions?

Rafael, Conference Call Moderator, Cementos Pacasmayo: Thank you. Thank you very much for the presentation. We will now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialed in by the web, you can type your question in the box provided or request to ask a voice question. We’ll just wait a moment or two for the questions to come in. Once again, if you are connected via the phone and you would like to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you are connected via the web, you can also request to ask a voice question or send your question as a text. Okay.

Looks like there are no questions from the audience, so I’m gonna pass the line back to the team for their closing remarks.

Ely Hayashi, Chief Financial Officer, Cementos Pacasmayo: Can you hear that?

Yeah.

Claudia Bustamante, Investor Relations Managing Director, Cementos Pacasmayo: In closing, our remarkable results this quarter reflect both the resilience of the northern Peruvian market and our team’s exceptional execution. While our double-digit revenue growth highlights the strength of our region, it is our disciplined management that delivered such a 32% EBITDA margin, one of the highest we have achieved in recent years. This peak in profitability is matched by historic sustainability milestones, not only our entry into the top 10% of S&P Global Sustainability Yearbook, and our tangible social impact through the One Hundred Thousand Floors to Play On initiative. Ultimately, these results and our finalized partnership with Holcim serve as a powerful endorsement of our strategy and our unwavering belief in the long-term potential of Peru as we focus on driving the sustainability. The sustainable progress of our country. We have one question from Integra.

Rafael, Conference Call Moderator, Cementos Pacasmayo: Yes. Maybe I will quickly read that question from Gerard Ford.

Claudia Bustamante, Investor Relations Managing Director, Cementos Pacasmayo: Yes, please.

From Integra. Congratulations on the strong Q1 2026 results. Margins and profitability clearly exceeded expectations. I have two questions. Gross margins expanded materially and exceeded expectations. How much of the improvement in cement unit costs do you consider structural, operational efficiencies, energy bagging, versus more cyclical factors such as volume and mix? Selling expenses increased meaningfully this quarter, driven by marketing and higher credit provisions. How much of this increase should we view as recurring versus one-off or timing related?

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: Yes. Thank you. In terms of your question, I mean, these are not really cyclical factors. As you know, I mean, our cement sales in the past is very little of cyclical in the second semester of the year. Usually, the first quarter is the weakest one, but not by a long shot. I think in terms of selling expenses, we are. We keep investing in positioning our brand. We keep investing in securing our dealers and our distributors are very happy. I think, I mean, our plans now is to maintain the current margin in terms of EBITDA profitability. In terms

Rafael, Conference Call Moderator, Cementos Pacasmayo: Uh, we-

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: And just to-

Rafael, Conference Call Moderator, Cementos Pacasmayo: Mm-hmm.

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: Just to

Rafael, Conference Call Moderator, Cementos Pacasmayo: We also-

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: To add in terms of the marketing, I mean, to be just absolutely precise. I mean, in the second semester, they may be a little more in defense of how we are doing the provisions.

Rafael, Conference Call Moderator, Cementos Pacasmayo: Thank you. We also got a voice question from Gabriel from Scotiabank. Gabriel, please go ahead. Your line is now open.

Gabriel, Analyst, Scotiabank: Hi. Thank you. Congrats on the results. Just a quick follow-up question. Now that Holcim has completed the acquisition and the controlling stake, can you elaborate on any changes that we should expect on capital allocation, strategic priorities, perhaps dividends? Thank you.

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: Thank you for your question. I mean, I think, so far, we’ll have to wait to see what they decide as new shareholders. For the time being, we keep the course steady.

Gabriel, Analyst, Scotiabank: Okay. Thank you very much.

Rafael, Conference Call Moderator, Cementos Pacasmayo: Okay. Thank you. Thank you very much. Maybe just a quick final reminder is for the rest of the participants, if you would like to ask a voice question, and you are connected via the phone, please press star two on your phone keypad and wait for your name to be prompted. If you are connected via the web, you can also request to ask a voice question or send your question as a text. Okay. We are seeing no further questions. Maybe I will pass the line back to the management team in order to finalize the call.

Humberto Nadal, Chief Executive Officer, Cementos Pacasmayo: Like I said before, I mean, we’ve had a very exciting beginning of the quarter. I think, I mean, it’s all a reflection of an incredible team always pushing forward. It’s also an enormous reflection on the potential and the durability and the resilience of a country and specifically of a region that has shown always good attitude forward. We are very convinced of the future, and the best is still to come. Thank you, everybody, for joining us today. Should you have any further questions, you know where to find us. Thank you.

Rafael, Conference Call Moderator, Cementos Pacasmayo: Thank you. This concludes our call for the day. We are now closing all the lines. Goodbye.